Poverty rate spiked when $600 stimulus payments expired, study finds

The U.S. poverty rate rose by nearly 2 percent over the summer, with about 7 million more Americans falling below the line, according to new research from the University of Chicago, the University of Notre Dame and Zhejiang University in China.

The expiration of government assistance programs likely contributed to the increase, which rose to 11.3 percent in September and October, from 9.4 percent from April to June, according to the study, which analyzed income level data from monthly U.S. census surveys.

Despite declining unemployment numbers, the current rate is almost half a percentage point higher than it was before the pandemic began. The authors of the study connect this increase to the end of programs such as the weekly $600 Federal Pandemic Unemployment Compensation (FPUC) payments and one-time stimulus checks.

“Ways of coping are starting to run out. The fact that some people’s income is still below what it was before the pandemic is getting to be a bigger and bigger problem.”

“The poverty rate fell initially in the pandemic because we initially provided a lot of aid,” Bruce Meyer, a study co-author and McCormick Foundation professor at the University of Chicago Harris School of Public Policy, told NBC News. “People are running down their stock of savings if they had any. They already asked about borrowing money from family and friends. Their ways of coping are starting to run out. The fact that their income is still below what it was before the pandemic is getting to be a bigger and bigger problem.”

The poverty level spiked in July, the same month that the FPUC program ended — jumping to 10.3 percent from 9.3 percent the previous month, according to Meyer’s research.

This raises the question whether poverty will continue to rise when the remaining emergency relief programs come to an end. Two key programs are set to expire at the end of December: Pandemic Unemployment Assistance, which provides benefits for people who would not normally qualify; and Pandemic Emergency Unemployment Compensation, which offers an additional 13 weeks of benefits for those who have used up their regular unemployment insurance. Together, these programs currently support nearly 15 million Americans.

“There are groups that are going to continue to pay a steep price as a result of the pandemic, and I think it does call for some intervention,” said James Sullivan, a study co-author and Gilbert F. Schaefer College professor of economics at the University of Notre Dame, told NBC News. “Either the labor market has to improve for those groups, or it could come in the form of public policy.”

As with unemployment, poverty has also affected some Americans more than others. Over the past few months, the poverty rate has increased by 5.4 percent among Blacks, compared to 1.4 percent among whites. Almost half of the nearly 7 million Americans who have fallen into poverty since May are Black, Meyer said.

Although the poverty rate has increased by almost the same amount for both women and men in recent months, women still suffer at a higher rate. In October, the poverty rate for women was 12.1 percent, as compared to 10.8 percent among men, the study showed.

Lower unemployment numbers do not paint a clear enough picture of how Americans are faring during this time, Sullivan said.

“One thing that’s happened is that millions have left the labor force,” he said. “Because they’re not looking for work, they’re not counted amongst the ranks of the unemployed, and so seeing a decline in unemployment is not going to be sufficient for concluding that we’re moving in the right direction.”

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